1. What is the net operating income (loss) in Year 1 under absorption costing?

2. What is the net operating income (loss) in Year 2 under absorption costing?

3. What is the net operating income (loss) in Year 1 under variable costing?

4. What is the net operating income (loss) in Year 2 under variable costing?

The net operating income (loss) under absorption costing is less than the net operating income (loss) under variable costing in Year 2 because (Select all that apply.):

Make a note of the absorption costing net operating income (loss) in Year 2.

At the end of Year 1, the companys board of directors set a target for Year 2 of net operating income of $150,000 under absorption costing. If this target is met, a hefty bonus would be paid to the CEO of the company. Keeping everything else the same from part (2) above, change the units produced in Year 2 to 5,800 units.

Would this change result in a bonus being paid to the CEO?

What is the net operating income (loss) in Year 2 under absorption costing?

Would this doubling of production in Year 2 be in the best interests of the company if sales are expected to continue to be 3,000 units per year?